Outlook Let us be fair to George Osborne: at least the Chancellor has finally given an honest account of his views about the proposal for a financial transactions tax in Europe. Previously, Mr Osborne and his Government colleagues have said they do not object to the idea of such a tax in principle, worrying only that in practice unless all major financial centres sign up, those that don't will have an unfair advantage. Yesterday, the Chancellor offered fellow finance ministers a comprehensive critique of German and French proposals – a string of arguments about why the tax is a bad idea.
Moreover, one of Mr Osborne's complaints, that potential revenues from the tax have already been spent "four times over", was spot on. The advocates of this tax do have a whole series of different ideas about how they spend the money, ranging from a boost for foreign aid budgets to the repayment of public debt.
That people have varying priorities, however, is not an argument against the tax itself. Nor do the Chancellor's other arguments convince. He complains about the impact on economic growth, for example, but this has not prevented him imposing additional taxes – the VAT hike, for example – on other constituencies.
The evidence on what the FTT might do to growth is, in any case, conflicting. Nor does any of it take into account one big benefit of such a tax, its potential to reduce volatility. As for the idea that this would be a tax on savers and pensioners, since institutions managing their money would have to pay when dealing on their behalf, so too then is stamp duty, which the UK already levies. And it would be high frequency traders rather than long-term institutional investors that pay the most.